Taking the lead: Canadian Pacific Railway Limited (CP)

Canadian Pacific Railway Limited (NYSE: CP) stock jumped 2.12% on Friday to $79.36 against a previous-day closing price of $77.71. With 1.58 million shares changed hands, the volume of the stock remained lighter than its average volume of 2.33 million shares. During the session, the Railroads company that operates in wider Industrials sector, reached to the highest price of $79.38 whereas the lowest price it dropped to was $77.57. The 52-week range on CP shows that it touched its highest point at $84.22 and its lowest point at $64.37 during that stretch. It currently has a 1-year price target of $83.13. With its current market cap of 91.74 billion, CP has annualized dividend of $0.76 while the current yield stands at 0.96%. Beta for the stock currently stands at 0.76.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of CP was up-trending over the past week, with a rise of 2.27%, but this was up by 10.76% over a month. Three-month performance surged to 5.70% while six-month performance rose 8.62%. The stock gained 7.67% in the past year, while it has gained 10.31% so far this year. A look at the trailing 12-month EPS for CP yields 2.90 with Next year EPS estimates of 4.51. For the next quarter, that number is 1.01. This implies an EPS growth rate of 16.20% for this year and 22.38% for next year. EPS is expected to grow by 10.69% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 14.50%.

Float and Shares Shorts:

At present, 929.90 million CP shares are outstanding with a float of 929.56 million shares on hand for trading. On Jul 14, 2022, short shares totaled 14.77 million, which was 1.59% higher than short shares on Jun 14, 2022. In addition to Mr. Keith E. Creel as the firm’s CEO, Pres & Director, Mr. Nadeem S. Velani serves as its Exec. VP & CFO.

Institutional Ownership:

Through their ownership of 76.12% of CP’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 40.63% of CP, in contrast to 34.99% held by mutual funds. Shares owned by individuals account for 1.52%. As the largest shareholder in CP with 6.01% of the stake, TCI Fund Management Ltd. holds 55,860,385 shares worth 55,860,385. A second-largest stockholder of CP, WCM Investment Management LLC, holds 33,849,081 shares, controlling over 3.64% of the firm’s shares. Massachusetts Financial Services is the third largest shareholder in CP, holding 32,742,685 shares or 3.52% stake. With a 1.36% stake in CP, the WCM Focused International Growth is the largest stakeholder. A total of 12,679,138 shares are owned by the mutual fund manager. The Vanguard Total International Stoc, which owns about 1.30% of CP stock, is the second-largest Mutual Fund holder. It holds 12,078,449 shares valued at 843.56 million. Parnassus Core Equity Fund holds 1.20% of the stake in CP, owning 11,182,599 shares worth 780.99 million.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Jun 29, 2022, CP reported revenue of $2.20B and operating income of $898.00M. Over the past year, revenue came in at $8.02B while operating income stood at $3.01B. It generated $765.00M net income for the quarter, which came to $2.36B over the last twelve months. The EBITDA in the recently reported quarter was $1.41B and diluted EPS was $0.63. EBITDA for the full year was $4.58B.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for CP since 29 analysts follow the stock currently. There are 13 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 12 believe that the stock is worth HOLDING, 2 give it an OVERWEIGHT rating, and 2 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With CP analysts setting a high price target of $147.83 and a low target of $100.27, the average target price over the next 12 months is $114.27. Based on these targets, CP could surge 86.28% to reach the target high and rise by 26.35% to reach the target low. Reaching the average price target will result in a growth of 43.99% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. CP will report FY 2022 earnings on 01/25/2023. Analysts have provided yearly estimates in a range of $4.10 being high and $3.40 being low. For CP, this leads to a yearly average estimate of $3.74. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Canadian Pacific Railway Limited surprised analysts by -$0.01 when it reported $0.70 EPS against a consensus estimate of $0.71. The surprise factor in the prior quarter was -$0.04. Based on analyst estimates, the high estimate for the next quarter is $1.07 and the low estimate is $0.92. The average estimate for the next quarter is thus $1.01.

Summary of Insider Activity:

Insiders traded CP stock several times over the past three months with 0 Buys and 2 Sells. In these transactions, 0 shares were bought while 1,342 shares were sold. The number of buy transactions has increased to 45 while that of sell transactions has risen to 38 over the past year. The total number of shares bought during that period was 152,024 while 110,840 shares were sold.

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